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2013 OIG Work Plan Summary
Anthony J. Burba, Esquire Arnold & Porter LLP
Washington, DC
Amy K. Fehn, Esquire Wachler & Associates PC
Royal Oak, MI
Matthew R. Fisher, Esquire Mirick O'Connell DeMallie & Lougee LLP
Worcester, MA
David L. Haron, Esquire Frank Haron Weiner PLC
Troy, MI
Carolyn F. McNiven, Esquire DLA Piper LLP (US)
San Francisco and East Palo Alto, CA
Lisa T. Rosenbaum, Esquire Ropes & Gray LLP
New York, NY
Laura E. Schattschneider, Esquire* General Attorney
Centers for Medicare & Medicaid Services Division Office of the General Counsel
U.S. Department of Health & Human Services
DECEMBER 2012
MEMBER BRIEFING
FRAUD AND ABUSE PRACTICE GROUP
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Part I: Medicare Part A and Part B Hospitals, Nursing Homes, Hospices, Home
Health Services, and Medical Equipment and Supplies
Hospitals
In the coming year, the U.S. Department of Health and Human Services (HHS), Office
of Inspector General (OIG) will initiate eleven new reviews of hospital practices. To
assess inpatient billing accuracy, OIG will review changes in inpatient billing stays from
2008–2012 and how practices evolved. A new study will also begin of whether the
Centers for Medicare & Medicaid Services (CMS) could save money by bundling
payments for outpatient services delivered up to fourteen days prior to an inpatient
hospital admission as opposed to the current three-day pre-admission window.
Additional new studies related to billing include reviewing non-hospital-owned physician
practices billing as provider-based physician practices, which can result in higher
reimbursements; compliance with transfer policies and use of swing beds in hospitals
receiving discharged patients; payments for canceled surgical procedures that raise
concerns for multiple billings; and payments for mechanical ventilation to ensure
patients received the service for the minimum required ninety-six hours. Other new
studies include assessment of the extent to which Quality Improvement Organizations
worked with hospitals to conduct quality improvement projects or provide technical
assistance, and the impact to Medicare payments by hospital acquisitions of ambulatory
surgery centers.
Ongoing reviews of hospital procedures include focus on readmissions and transfers.
OIG will review same-day admission data to determine the basis for the patient being
readmitted and whether stays are appropriately combined. OIG is also continuing its
review of transfers, specifically the frequency of patients being discharged to hospice
care after a short stay at the hospital. Additionally, OIG will review claims to determine
whether acute care hospitals are frequently transferring patients with certain diagnoses
that were coded as present at admission.
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OIG is also continuing service and billing reviews. Inpatient and outpatient payments to
acute care hospitals will be examined to recommend recovery of overpayments and
identify providers that routinely submit improper claims. Inpatient outlier payments will
continue to be reviewed to identify characteristics of hospitals with high or increasing
rates of outlier payments. OIG will also determine whether CMS performed necessary
reconciliations to allow Medicare contractors to perform final settlement of cost reports
associated with outlier payments. OIG will also continue its study of graduate medical
education payments for occurrences of duplicative or excessive payments.
OIG will continue its review of the use of observation services and characteristics of
beneficiaries who received such services. OIG is determining how much Medicare paid
for such services.
Nursing Homes
OIG is initiating three new studies of nursing homes. OIG will determine whether state
survey agencies verified correction plans for deficiencies identified during recertification
studies. Regulations require nursing homes to submit correction plans for such
identified deficiencies. OIG will also initiate a study of the administration of atypical
antipsychotic drugs, including the type of such drugs most commonly used and
characteristics associated with nursing homes that more frequently administer the
drugs. The third new study will assess the extent to which CMS and states oversee the
accuracy and completeness of Minimum Data Set data submitted by nursing homes.
Ongoing studies will focus on reviews of adverse and temporary harm events for
beneficiaries receiving post-acute care in nursing homes. OIG will identify contributing
factors to such events and the extent to which such events were preventable. OIG is
also continuing its review of the use of Residential Assessment Instruments to develop
care plans to beneficiaries.
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OIG will review poorly performing nursing homes and ensure that corrective actions are
being taken to address the poor performance. OIG is also concerned about
hospitalizations of Medicare beneficiaries in nursing homes and is continuing its
examination of which hospitalizations were caused by manageable or preventable
conditions.
OIG is also reviewing questionable billing patterns associated with nursing homes.
Services must be billed directly by suppliers and other providers and OIG was directed
to monitor these services for abuse.
Hospices
OIG is continuing its examination of hospices’ marketing materials and financial
relationships with nursing facilities. OIG previously found that 82% of hospice claims for
beneficiaries in nursing facilities did not meet coverage requirements. OIG is also
continuing its assessment of general inpatient care claims submitted by hospices.
Home Health Services
OIG is initiating a new study of Home Health Agency (HHA) compliance with face-to-
face encounter requirements. Physicians or certain other practitioners working with
physicians are required by statute to certify that beneficiaries are eligible for home
health services within a specified time period. OIG is also starting a review of the extent
to which HHAs comply with state requirements to perform criminal background checks
of applicants and employees.
OIG is continuing review of the timeliness of HHA recertification and complaint surveys
as well as CMS oversight designed to monitor such surveys. OIG is also continuing its
examination of HHA Outcome and Assessment Information Set (OASIS) data to identify
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payments for episodes where OASIS data is not submitted or codes are not consistent
with the OASIS data.
OIG is continuing review of activities performed by CMS and its contractors to identify
and prevent improper home health payments by reviewing payments from January to
October 2011. OIG is also looking at compliance with the home health prospective
payment system, including whether proper documentation exists to support claims. OIG
is also looking at HHA revenue and expense trends to determine whether payment
methodologies are appropriate.
Medical Equipment and Supplies
OIG is initiating seven new reviews of medical equipment and supply services. OIG will
review the accreditation organization requirements and processes for granting
accreditation to medical equipment suppliers and how it is ensured that Medicare quality
standards are met. OIG is also starting to look at compliance for claims submitted in
connection with lower limb prosthetics to determine whether requirements in CMS’
Benefits Policy manual are being met. Power mobility devices are also the subject of a
new review to ensure claims submitted were appropriate. OIG is also examining the
reasonableness of fee schedule amounts for vacuum erection systems. OIG will
compare the supply replacements schedules for supplies related to continuous positive
airway pressure machines in comparison with other federal programs to identify
potential savings. Several new reviews will look at the extent to which suppliers are
improperly billing Medicare for non-mail order diabetes test strips in competitive bidding
areas.
Ongoing program integrity reviews focus on the reliability of service code modifiers
entered by suppliers on claims. Supporting documentation must exist for the modifier
used. OIG is also continuing its review of the use of surety bonds to recover
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overpayments, including whether CMS maintains complete and accurate surety bond
information about suppliers.
Specific supplies continue to be an OIG focus. OIG is still reviewing the reasonableness
of Medicare payments for parenteral nutrition as compared to other federal programs.
Frequently replaced supplies are another concern. OIG is still reviewing claims to
determine whether medical necessity, frequency, and other Medicare requirements are
being met in claims that are submitted. With regard to diabetes testing supplies, OIG is
still looking at whether claims for home blood glucose test strips and lancet supplies are
appropriate, including whether an appropriate modifier code is used. OIG is also
reviewing whether system edits are effective to prevent inappropriate payments for
home blood glucose test strips and lancets. OIG is also reviewing claims data from
2011 to identify suppliers with inappropriate payments and/or questionable billings.
Common to All Providers
In new reviews, OIG will determine how often onsite visits occur as part of the Medicare
enrollment or reenrollment process to implement the requirements under the Patient
Protection and Affordable Care Act of 2010 (ACA) for increased site visits to weed out
fraudulent providers billing without a physical location. A similar review will be
conducted to determine which Medicare Part B providers had practice locations that
matched commercial mailbox addresses in 2011, again targeting fraudulent providers
that use commercial mailbox services to cover up the fact that they do not have a
physical practice location. Another new review will involve Medicare Part A and Part B
claims submitted by error-prone providers to determine their validity, project the results
to each provider’s population of claims, and recommend that CMS requests funds on
projected overpayments. “Top error-prone providers” will be those with the highest
dollar error amounts over a four-year period based on a review using CMS’
Comprehensive Error Rate Testing (CERT) Program Data. OIG will review providers
and suppliers to determine if any received payment under a new Medicare provider
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number, despite having been referred to the U.S. Department of Treasury for failure to
refund overpayments. CMS may deny a provider’s or supplier’s enrollment in the
Medicare program if the current owner, physician, or non-physician practitioner has an
existing overpayment at the time of filing an enrollment application.
OIG will continue its review of payment systems controls that identify high cumulative
Medicare Part B Payments to physicians and suppliers to determine the effectiveness of
those controls. “A high cumulative payment is an unusually high payment made to an
individual physician or supplier, or on behalf of an individual beneficiary, over a
specified period.” OIG will continue to review Medicare claims submitted with G
Modifiers (indicating that the supplier expected Medicare to deny payment), and the
extent to which Medicare paid such claims. OIG will also look for suppliers with
atypically high billing related to the G modifiers.
Physicians
OIG will continue to review the extent to which physician-owned distributors (PODs)
provide spinal implants purchased by hospitals, and whether those PODs are
associated with high use of spinal implants. OIG will continue the review of physicians’
compliance with the assignment rules to determine to what extent beneficiaries are
being inappropriately billed in excess of the Medicare allowable amounts. “Incident to”
services will be reviewed to determine whether they reflect a higher rate of error than
that of non-incident-to services; OIG noted its concerns with the potential for unqualified
non-physicians performing incident-to services, and its suspicions that such services
may be prone to overutilization. OIG will also continue its study of Place-of-Service
(POS) claims errors when physician services are provided in a location that receives
facility fees (resulting in excess payments to the physician if the POS is identified as a
non-facility setting). OIG will continue to assess the extent to which CMS made
potentially inappropriate payments for evaluation and management (E/M) services and
the consistency of E/M medical review determinations, though apparently limiting its
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review in 2013 to claims from 2010. OIG will also look at the use of modifiers for
services provided during the global surgery period.
OIG will review Medicare Part B claims for personally performed anesthesia services to
determine whether they were supported in accordance with Medicare requirements, as
well as determine whether payments for anesthesiologists services reported on a claim
with the “AA” service code modifier met Medicare requirements. Another new review will
focus on questionable billing for ophthalmological services during 2011, as well as a
review of the geographic locations of providers exhibiting questionable billing for
ophthalmological services in 2011.
Independent Therapists
OIG will continue its review of outpatient physical therapy services, focusing on
independent therapists who have a high utilization rate.
Sleep Disorder Clinics
For this ongoing review, OIG will examine the appropriateness of Medicare payments to
physicians and independent diagnostic testing facilities for sleep test procedures,
including appropriate use of modifiers that impact payment. Polysomnography
payments will also be examined.
Ambulances
One new review will compare reimbursements by other payors to those of the Medicare
fee schedule for similar services. Another new review will examine Medicare claims
data to identify questionable billing, such as transports that were potentially not
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medically reasonable and necessary, and potentially unnecessary billing for Advanced
Life Support Services and specialty care transport. OIG also plans to examine
relationships between ambulance companies and other providers.
Ambulatory Surgical Centers (ASCs)
OIG will review the appropriateness of Medicare’s methodology for setting ASC
payment rates. A new element of this review for 2013 will determine whether there is a
payment disparity between the ASC and Hospital outpatient department payment rates
for similar surgical procedures provided in both settings. OIG will continue its review of
the safety and quality of care for Medicare beneficiaries receiving services in ASC and
Hospital Outpatient Departments, apparently looking to compare the results for the two
settings.
Partial Hospitalization
OIG will continue its ongoing review of Partial Hospitalization Program (PHP) services,
including whether payments met Medicare requirements for documentation of plan of
care and physician supervision and certification requirements. The review of
questionable billing practices for PHP services included in the 2012 Work Plan will not
be continued in 2013.
Rural Health Clinics
In a new review OIG will determine the extent to which Rural Health Clinics (RHC) do
not meet basic location requirements to identify RHCs receiving enhanced Medicare
reimbursement despite failing to meet the locality requirements in the Balanced Budget
Act of 1997.
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Electrodiagnostic Testing
In a new review OIG will look at Medicare claims data to identify questionable billing for
electrodiagnostic testing and will determine the extent to which Medicare utilization
rates differ by provider specialty, diagnosis, and geographic area.
Part B Imaging Services
OIG will continue its review of Medicare payments to determine whether they reflect the
expenses incurred and whether utilization rates reflect industry practice.
Diagnostic Radiology
For this ongoing review, OIG will look at Medicare payments for high-cost diagnostic
radiology tests to determine if they were medically necessary and whether the same
diagnostic tests are repeated for the same beneficiary when ordered by different
physicians treating the patient.
Laboratories
Though not listed as new, a review not included in the 2012 work plan will describe
billing characteristics for Part B clinical laboratory tests in 2012. An ongoing review will
examine how the methods of establishing Medicare laboratory test payment rates vary
from those of state Medicaid and Federal Employee Health Benefits programs. The
methodology for this review will compare Medicare payment rates for 20 lab tests (those
identified as most frequently ordered and most costly in terms of total dollars paid)
against the payment rates of those other programs. Finally, OIG will continue to work on
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its review of Part B payments for glycated hemoglobin A1C tests, with a focus on the
Medicare contractors’ procedures for screening for appropriate frequency of testing.
Chiropractors
OIG will review Medicare Part B payments for chiropractic services to determine
whether such payments were for medically reasonable and necessary services.
Specifically, chiropractic maintenance therapy is not considered medically reasonable or
necessary.
Organ Procurement Organizations
OIG will continue its review of Medicare payments to Organ Procurement Organizations
to determine if those payments were correct and supported by documentation, including
whether the organizations correctly reported organ statistics for purposes of proper
allocation of costs in their cost reports.
End Stage Renal Disease (ESRD)
OIG will look at Medicare’s oversight of dialysis facilities, including the accountability of
state survey and certification agencies. In another review, OIG will look at Medicare
pricing and utilization under the new End Stage Renal Disease (ESRD)-Prospective
Payment System “bundled” payment. OIG will also be reviewing ESRD drug payments.
OIG will also review payments for ESRD drugs under the new bundled rate system by
comparing facilities’ acquisition costs for certain drugs to inflation-adjusted cost
estimates and determine how costs for the drugs have changed since the last review.
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Part B Payments for Prescription Drugs
OIG will continue several ongoing reviews, including a comparison of average sales
prices to average manufacturer prices and a comparison of average sales prices to
widely available market prices. OIG will continue to examine payments for off-label anti-
cancer pharmaceuticals and biologicals, and whether alternative drugs might have
continued to be used instead. OIG will also look at acquisition costs and payments, and
usage patterns and payments, for Lucentis and Avastin related to treating wet age-
related macular degeneration. Another review will focus on payments for commonly
used physician-administered drugs and biologicals to determine if significant savings
could be achieved by a change in Part B reimbursement methodologies. OIG will
continue to focus on off-label and off-compendia use of drugs, and identify CMS
oversight mechanisms. OIG will also be scrutinizing payments associated with the drug
Herceptin, and whether wastage allowances were billed appropriately. OIG will also look
to see if outpatient drug claims (e.g., chemotherapy) were paid inappropriately because
of incorrect coding or overbilling of units.
OIG has identified eight new reviews for Fiscal Year (FY) 2013 OIG will look into the
extent to which the prescription drug compendia oversee conflicts of interest through
reporting requirements and/or mitigation policies and the number and nature of the
compendia’s reported conflicts. In 2013, OIG will work to determine the extent to which
providers of Part B drugs that are in short supply report those shortages. Hospitals will
also be asked to provide information on experiences with drug shortages, including any
effect on pricing, quality of care, and market availability. Rounding out its look at the
effect of drug shortages, OIG will quantify the effect of drug shortages on manufacturer
sales, including using data from CMS to determine the extent to which demand and
average sales price (ASP) of drugs changed when the drugs were reportedly in
shortage and whether drugs that did not show substantial decline in unit during the
shortage quarter experienced an increase in Part B utilization during that period. OIG
will conduct a review of whether Part B payments for immunosuppressive drugs billed
with the KX modifier met Medicare documentation requirements. Another new review
will look at provider acquisition costs for Part B-covered drugs infused through medical
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equipment and determine the amount Medicare could have saved had payment
amounts for these drugs been based on ASP (infused drugs, as opposed to other
reimbursed drugs, are paid based on average wholesale price). Finally, OIG will
conduct a new review to determine the financial impact of rescinding least costly
alternative (LCA) policies for certain prostate cancer drugs covered under Part B and
how Part B utilization for those drugs changed after the LCA policies were rescinded.
Part A and B Contractors
OIG has several new reviews related to its oversight of Part A and B contractors. First,
OIG will conduct a review of CMS’ contracting landscape including the number, types,
and dollar amount of active CMS contracts and how CMS maintains all of its contract
information. OIG will also examine CMS’ compliance with contract documentation
requirements. OIG will examine the extent to which CMS conducted performance
assessment and monitoring of the Medicare Administrative Contractors (MACs) and
describe the extent to which the MACs met, did not meet, or exceeded performance
standards and the extent to which CMS identified and MACs addressed performance
deficiencies. Also new for 2013 is a review of whether MACs fulfilled their contractual
obligations specific to system edits in 2010 and 2011 and how MAC error rates varied
across regions compared to differences in MACs’ implementation, application, and
evaluation of edits since 2010 and 2011. OIG will also determine the number of Part B
claims that were suspended for manual prepayment review on the basis of system edits
but on which the reviews were not conducted. Another new review will be of CMS’
oversight of fraud and abuse task order requirements for Zone Program Integrity
Contractors.
OIG will also continue to monitor contractor performance and reporting related to
administrative costs, whether Medicare contractors have calculated and claimed
reimbursement for Medicare’s share of various employee pension costs, the post-
retirement health benefit costs, post-retirement health benefit costs for fiscal
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intermediaries (FIs) and carriers, and whether contractors are meeting error rate
reduction plan requirements. OIG will also review the extent that Recovery Audit
Contractor- (RAC-) identified improper payments and vulnerabilities and made potential
fraud referrals in 2010 and 2011, and the activities that CMS performed to resolve RAC-
identified vulnerabilities, address potential fraud referrals, and evaluate RAC
performance in 2010 and 2011. Another review will look at the performance evaluation
reports submitted to CMS by the National Supplier Clearinghouse (NSC) to determine
whether the NSC performs all contractually required activities and to assess their results
and an assessment of CMS’ oversight of the NSC. OIG will also conduct independent
evaluations of information systems security programs of Medicare FIs, carriers, and
MACs and report the assessment to Congress. OIG will review CMS’ policies,
instructions, and procedures designed to ensure adherence to federal data privacy,
information security, and contractual requirements and conduct information technology
closeout audits at Medicare contractors that left the program during FYs 2007 and 2008
and assess compliance with federal requirements. OIG will continue reviewing security
controls implemented by Medicare and Medicaid contractors as well as hospitals to
prevent the loss of protected health information stored on portable devices and media.
Finally, OIG will review to what extent Part B services and items paid under the
Medicare Physician Fee Schedule are affected by Local Coverage Determinations
(LCD) and the variation in coverage for these services and items as a result, as well as
CMS’ efforts to evaluate and adopt new LCDs for national coverage.
Other Part A and Part B Management Systems Issues
OIG has several additional new reviews in this area. OIG will review whether Medicare
payments for incarcerated beneficiaries complied with federal requirements as well as a
review of payments made on behalf of beneficiaries who were unlawfully present in the
United States on the dates of service. A review will also be conducted in 2013 to
determine whether Medicare payments were made for deceased beneficiaries in 2011.
Another new review has OIG looking at the procedures that CMS and claims processors
15
have for handling undelivered Medicare Summary Notices. Another new review will look
at whether requirements were met with respect to post-Hurricane Katrina recovery
grants.
OIG will continue several reviews from previous years including an assessment of the
effectiveness of Medicare’s controls regarding Medicare as Secondary Payer. OIG will
continue its oversight of the CERT program to evaluate CMS’ efforts to ensure the
accuracy of the FY 2012 error rate and to reduce improper payments. OIG will also
assess the National Provider Identification and Provider Enrollment, Chain, and
Ownership System data to ensure they are complete, consistent, and accurate and
access CMS’ supporting processes. OIG will review CMS’ compliance with the Privacy
Act of 1974 and determine whether CMS is accounting for disclosures in accordance
with that act, and also describe CMS’ policies and practices in implementing the
safeguards to protect individuals’ records. OIG will also evaluate CMS’ declaration of
overpayments deemed currently not collectable and review CMS’ actions to reduce and
recover currently not collectible debt. Finally, OIG will renew its efforts to describe
redeterminations processed in 2008–2011 for Medicare Parts A and B
Part II: Medicare Parts C and D
Oversight of Medicare Parts C and D
As described in more detail below, OIG will continue to review the activities of, and
oversight by, Medicare Advantage (MA) organizations, Part D sponsors, and CMS. OIG
will also focus on monitoring Medicare Parts C and D fraud, waste, and abuse by
reviewing the benefit integrity activities of the National Benefit Integrity (NBI) program
Medicare Drug Integrity Contractors (MEDICs). Such benefit integrity activities include
measures taken by the NBI MEDIC to detect and prevent Medicare Parts C and D
fraud, waste, and abuse nationwide. OIG will assess the volume of the NBI MEDICs’
benefit integrity activities and the barriers they have encountered in performing them.
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Part C (Medicare Advantage)
As a result, in part, of the expansion in 2012 of MA encounter data reporting
requirements from an abbreviated set of diagnosis data to a more comprehensive set of
data, OIG will begin a new review of CMS’ oversight of encounter data, including the
extent to which such data is complete, consistent, and verified for accuracy by CMS.
Further, OIG will continue to engage in the following reviews of CMS’ oversight efforts: a
review of CMS’ oversight of the enrollment practices of Special Needs Plans to
determine their compliance with enrollment requirements; a review of the work
performed by CMS’ Office of the Actuary and its contracted actuary reviewers to ensure
that its reviews of Part C bids were conducted in accordance with Medicare policies and
procedures, and that issues identified during such reviews were sufficiently addressed
before bid approval; and an assessment of CMS’ efforts to ensure MA organizations’
compliance with Part C reporting requirements.
With respect to risk-adjusted payments, OIG will continue to review the accuracy of risk-
adjustment data submitted by, and the validity of resulting payments issued to, MA
organizations, including those that offer prescription drug plans (MA-PD organizations).
Accordingly, OIG will engage in the following activities: a review of whether CMS
properly adjusted payments to MA organizations based on the results of its risk-
adjustment data validation reviews; an assessment of whether diagnoses that MA
organizations submitted to CMS for use in determining risk-adjusted payments to such
organizations complied with federal requirements and were supported by medical
record documentation; and a review of whether the beneficiary diagnosis codes
submitted to CMS by MA-PD organizations were valid and based on accurate
supporting data, and thus resulted in accurate risk scores and risk-adjusted payments to
MA-PD organizations.
To ensure quality performance by MA organizations, OIG will continue to review the
organizations’ oversight of contractors that provide enrollees benefits, such as
prescription drugs and mental health services. Significantly, it will also begin to review
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notices sent to beneficiaries by MA organizations regarding denied requests or
payments for services. During this new review, OIG will determine whether these
notices clearly explained beneficiaries’ appeal rights. OIG will then compare the denials
of services and payments for which beneficiaries chose to appeal with those denials for
which beneficiaries did not choose to appeal.
Finally, OIG will maintain its efforts to identify duplicate Medicare capitation and fee-for-
service payments to selected cost-based Health Maintenance Organization plans. It will
also continue to review expenditures listed on cost reports by selected Healthcare
Prepayment Plans to determine whether these expenditures were reasonable and
allowable for reimbursement.
Part D (Prescription Drug Program)
Part D Sponsor Oversight and Program Integrity Initiatives
To promote the shared responsibilities of CMS and Part D sponsors to protect the Part
D program from fraud, waste, and abuse, OIG has begun a review of Part D sponsors’
oversight of pharmacy benefit managers’ (PBMs’) administration of plan benefits and
implemented two new program integrity initiatives. Specifically, OIG will assess the Part
D sponsors’ abilities to oversee PBM administration of formularies and management of
prescription drug use. With respect to the program integrity initiatives, OIG will identify
safeguards established by pharmaceutical manufacturers to ensure that beneficiaries
do not use copayment coupons to obtain drugs paid for by the Part D program. OIG will
also review the volume of voluntary reports to CMS since 2010 by Part D sponsors
about their antifraud, waste, and abuse activities related to the Part D program,
including the types of fraud, waste, and abuse incidents and how plan sponsors identify
and respond to these incidents.
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Patient Safety
To ensure patient safety and quality of care, OIG will continue to assess whether the
drugs used in the Part D program were determined to be safe and effective by the U.S.
Food and Drug Administration (FDA) and whether Part D beneficiaries received only
those drugs that the FDA had deemed safe and effective.
Specialty Tier Formularies and Related Cost-Sharing
Under CMS requirements, the monthly cost of a drug must exceed a certain amount for
inclusion on the specialty tier of a drug formulary.1 OIG notes that if CMS sets this
amount too low or the Part D sponsor misclassifies a drug as a specialty drug, a
beneficiary’s plan choices, drug adherence, and drug choices may be affected. Given
this concern, OIG will begin a new assessment of the variation in specialty tier
formularies and beneficiary cost-sharing requirements across prescription drug plans.
Reviews of Part D Drug Data and Payments
OIG will maintain its review of Prescription Drug Event records to determine the extent
to which Part D sponsors submitted data for prescription drugs for incarcerated
individuals and whether CMS accepted such data. In addition, OIG will continue its
previous reviews of the following: differences between the drug manufacturer rebate
amounts negotiated and received by Part D sponsors or PBMs and its impact on direct
and indirect remuneration reports submitted to CMS; sufficiency of Part D sponsors’
documentation supporting administrative costs and investment income included in their
annual bid proposals to CMS; risk-sharing payments between the government and Part
D sponsors to determine whether cost savings could have been realized had the
1 See Medicare Prescription Drug Benefit Manual, Chapter 6-Part D Drugs and Formulary Requirements,
Section 30.2.4 (last revised Feb. 19, 2010).
19
existing risk corridor thresholds remained at 2006 and 2007 levels; accuracy of Part D
sponsors’ tracking of beneficiaries’ true out-of-pocket costs; and data submitted by Part
D sponsors to calculate the coverage gap discount.
Further, OIG will maintain its review of Part D claims to determine whether the Part D
program is receiving the discount drug prices available at certain retail pharmacies with
discount generic drug programs and whether Part D claims have been duplicated in
Part A or Part B. OIG will also assess questionable billing in 2010 for human
immunodeficiency virus (HIV) drugs under the Part D program and identify pharmacies,
prescribers, and beneficiaries associated with these billing practices.
Lastly, OIG will continue to review CMS’ processes for reopening final payment
determinations and assess Part D drug claims billed in 2009 to identify any common
characteristics of prescribers and beneficiaries associated with unusually high billing.
OIG will also review the implementation of information systems at small and medium
size plans and plans relatively new to the Medicare program. It will assess the plans’
compliance with Part D contractual requirements, CMS regulations, and CMS
instructions for systems that support key Part D components such as coordination of
benefits and beneficiary enrollment.
Part III: Medicaid Reviews
In FY 2013, OIG will review the following general areas of the Medicaid program:
prescription drugs; home, community, and personal care services; other Medicaid
services, equipment, and supplies; state management of Medicaid; the Children’s
Health Insurance Program (CHIP) for Medicaid-eligible individuals; information systems;
and managed care.
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Prescription Drugs
OIG will continue several ongoing reviews of Medicaid drug pricing and manufacturer
rebates, including two reviews tracking the implementation of manufacturer rebate
provisions of the ACA.
OIG also included three new reviews in the FY 2013 Work Plan. Two of these relate to
manufacturer rebates: the first will evaluate states’ collection of rebates for physician-
administered drugs, and the second will determine whether states are collecting
increases in the minimum federal rebate pursuant to the ACA and evaluate whether and
how these federal increases are affecting state collection of supplemental rebates.
The third new review will examine the extent to which Medicaid claims for atypical
antipsychotic drugs prescribed to children related to off-label uses or indications not
included in one of the approved drug compendia. Such prescriptions have been the
focus of media and congressional attention since at least late 2011, when a study in the
journal Pediatrics indicated that Medicaid-eligible foster children frequently received
such prescriptions, the U.S. Government Accountability Office released a report
outlining similar findings, and a subcommittee of the Senate Committee on Homeland
Security and Government Affairs held a hearing on the topic.2 OIG has also released
several reports in recent years about prescription of atypical antipsychotics to Medicare-
eligible nursing home residents.3
Home, Community, and Personal Care Services
OIG will continue several ongoing reviews evaluating home, community, personal care,
and school-based services for compliance with the prerequisites for claiming federal
2 See www.hsgac.senate.gov/hearings/the-financial-and-societal-costs-of-medicating-americas-foster-
children; U.S. Government Accountability Office, HHS Guidance Could Help States Improve Oversight of Psychotropic Medications (Dec. 2011), available at www.gao.gov/assets/590/586570.pdf. 3 See, e.g., OIG, Medicare Atypical Antipsychotic Drug Claims for Elderly Nursing Home Residents, Rep.
No. OEI-07-08-00150 (May 2011), available at https://oig.hhs.gov/oei/reports/oei-07-08-00150.asp.
21
financial participation, including compliance with quality and provider qualification
standards.
Four new reviews are included in the FY 2013 Work Plan. In the first of these, OIG will
review state Medicaid payments for home health services to determine whether and to
what extent Medicare and Medicaid are both paying for the same services. Medicaid
should be the payor of last resort for these services, but may cover some home health
services in the first instance for dual eligibles, in part because the two programs have
different eligibility requirements for home health services. For example, there are
differences in Medicare and Medicaid requirements to qualify as “homebound.”
In the three other new reviews, OIG will determine whether state claims for home-and-
community-based (HCBS) waiver services comply with federal requirements. In two of
them, OIG will focus specifically on claims for supported employment services and adult
day healthcare services. In the third, it will review HCBS waiver claims more generally
to determine whether states are inappropriately claiming for room-and-board costs.
Other Medicaid Services
OIG will continue ongoing reviews of claims for hospice, family planning, and
transportation services. It will also continue an ongoing review monitoring state
compliance with the ACA provisions barring federal payments for healthcare-acquired
conditions.
Several new reviews are also included in the Work Plan. Four of these will focus on
potential Medicaid cost savings for medical equipment and supplies, both generally and
with regard to payment for home blood-glucose test strips and disposable incontinence
supplies. Two new reviews will focus on billing patterns and irregularities related to
dental services for children. OIG stated that its “[p]rior work indicates that some dental
providers may be inappropriately billing for services,” and Texas dental claims were the
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subject of a congressional hearing in April 2012.4 OIG will also begin a review of nursing
facility claims for communicable disease care that it says was prompted by a prior audit
that discovered unallowable state claims related to such care.
State Management of Medicaid
OIG groups numerous ongoing reviews related to state compliance with federal
claiming, rate-setting, and reporting requirements under this heading, which is new from
last year. It also lists reviews of several new topics:
Whether states are using the Federal Medical Assistance Percentages rates that
were in effect when expenditures were made when they report claim adjustments;
Whether states are claiming excessive federal reimbursement for Medicare
coinsurance and deductibles;
Whether states are using acceptable statistical sampling practices to allocate costs
among federal programs;
How the new state RACs are performing;
Whether states are enrolling and monitoring medical equipment suppliers in
accordance with state standards;
Whether states are appropriately determining hospital eligibility to participate in the
Medicaid program;
Whether states are complying with federal requirements for recovering and reporting
medical assistance costs from the estates of deceased beneficiaries; and
4 See http://oversight.house.gov/hearing/joint-hearing-is-government-adequately-protecting-taxpayers-
from-medicaid-fraud/.
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Whether states are complying with Money Follows the Person demonstration
program requirements.
OIG will also continue a review of state provider taxes that was added to the Work Plan
last year.
CHIP for Medicaid-Eligible Individuals
OIG groups two ongoing reviews of state administration of the CHIP program and
coordination of benefits under CHIP and Medicaid under this heading, which is new
from last year.
Information Systems
In FY 2013, OIG will continue several ongoing reviews of the integrity, security, and
accuracy of state information systems. It lists one new audit: an assessment of how well
a pilot database for claims and encounter information (the Transformed Medicaid
Statistical Information System) is working to improve detection of fraud, waste, and
abuse.
Medicaid Managed Care
OIG will continue several ongoing reviews examining whether managed care
organizations and states are providing Medicaid managed services in accordance with
federal requirements, including requirements regarding provider credentialing,
marketing, encounter data, and fraud and abuse detection and deterrence. OIG will also
continue a review of Medicaid managed care organization medical loss ratio refunds to
states.
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Three new reviews were included in the FY 2013 Work Plan. OIG will review whether
Medicaid managed care provider networks ensure sufficient beneficiary access to
services; whether states are ensuring that Medicaid managed care organization internal
grievance and appeals processes comply with federal requirements; and whether
Medicaid managed care organizations and states effectively identified, corrected, and
prevented fraud, waste, and abuse in 2011.
Other Medicaid-Related Reviews
In FY 2013, OIG will continue the following miscellaneous ongoing reviews: whether
Medicaid overpayments exist in provider patient accounts with credit balances; whether
CMS’ implementation of the Payment Error Rate Measurement process is achieving
desired results; whether CMS is adequately overseeing nursing home data
submissions; and how well state Medicaid Fraud Control Units (MFCUs) are performing.
Part IV: Legal and Investigative Activities Related to Medicare and Medicaid
Legal Activities
OIG will continue to advance its enforcement agenda through legal activities such as
imposing program exclusions and civil monetary penalties and assessments, monitoring
Corporate Integrity Agreements (CIAs), and issuing fraud alerts, advisory opinions, and
other industry guidance. It will also continue the activity initiated in FY 2012, namely
review of entities that do not enter CIAs.
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Exclusion from Program Participation
Individuals and entities may be excluded by OIG from participating in Medicare,
Medicaid, and other federal healthcare programs. Exclusions can be based on a variety
of underlying misconduct, ranging from licensing board disciplinary actions to program-
related and patient abuse convictions. State agencies typically refer matters to OIG for
potential exclusion.
Civil Monetary Penalties
OIG also imposes Civil Monetary Penalties (CMPs) for a variety of misconduct, such as:
Involvement in kickbacks under Section 1128B(b) of the Social Security Act;
Emergency Medical Treatment and Labor Act violations;
Provision of sub-standard items or services to patients; and
Other healthcare misconduct implicating OIG’s statutory authority.
False Claims Act and CIAs
OIG, in close coordination with the U.S. Department of Justice (DOJ), pursues federal
false claims cases when sufficient evidence of government fraud exists. Federal false
claims cases may result in exclusion of the defrauding individual or entity, or they may
also result in negotiated settlements with OIG and DOJ. Terms of these settlements can
include a CIA, under which the offender instills procedures and protocols to bring itself
into compliance with federal healthcare program requirements.
Offenders’ compliance with their own CIA is monitored by OIG through Independent
Review Organizations (IROs). CIA monitoring includes site visits and review of
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information submitted by a provider. Failure to comply with a CIA can result in penalties
or exclusion.
Offenders may settle federal false claims cases with the government without entering
into a CIA. Compliance reviews by OIG of such offenders is as extensive as, if not more
so than, CIA monitoring by IROs.
Advisory Opinions and Other Industry Guidance
In response to formal requests for guidance, OIG issues advisory opinions on the
application of healthcare laws to specific factual circumstances. When OIG determines
that certain practices are suspect, it issues fraud alerts and advisory bulletins. Broader
topics are often addressed by Compliance Program Guidance.
Provider Compliance Training
Providers have access to ample compliance training opportunities offered by OIG. Live
training sessions were recently conducted in several major U.S. cities, and one event
was streamed online for free. OIG’s website also contains other training materials,
videos, and podcasts, all targeted toward fighting fraud, waste, and abuse.
Provider Self-Disclosure
Entities that discover internal fraud, waste, or abuse need not wait for a federal
investigation or enforcement action. Rather, providers can voluntarily disclose such
conduct. Self-disclosure allows entities to better negotiate a settlement and potentially
avoid exclusion.
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The Provider Self-Disclosure Protocol outlines the steps necessary to disclose unlawful
conduct. After an initial disclosure, an internal investigation takes place to determine the
reasons behind, and consequences of, the conduct. OIG then reviews the internal
investigation and decides how to proceed regarding settlement or enforcement actions.
Investigative Activities
In FY 2013, OIG will continue to devote significant resources to investigating Medicare
and Medicaid fraud, and work closely on such matters with other law enforcement
partners including the Federal Bureau of Investigation (FBI), the Internal Revenue
Service (IRS), the U.S. Postal Service, and state MFCUs. The Health Care Fraud
Prevention and Enforcement Action Team (HEAT) program will continue to be a key
facet of OIG’s investigative activities. Under HEAT, HHS works with DOJ to facilitate
coordination in investigating Medicare and Medicaid fraud, by among other things
deploying Medicare Strike Force Teams to select districts. These Strike Force Teams,
which are an integral part of HEAT, work together with federal, state, and local law
enforcement to uncover fraud in a variety of proactive ways including the use of data
analytics, and to investigate and prosecute such cases quickly. Once fraud is identified,
OIG and CMS will continue to impose payment suspensions on providers and suppliers
who have been targeted as engaging in potentially fraudulent activity.
OIG investigates a variety of fraud and other misconduct in the healthcare field, such
as:
Overbilling Medicare or Medicaid;
Business practices involving kickbacks or unlawful self-referral by physicians;
Payment claims for services of a sub-standard quality; and
Drug benefit issues.
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Strike Force Teams also work with MFCUs on the state level to investigate Medicaid
fraud.
Part V: Public Health
OIG reviews the activities of numerous public health agencies within HHS. These
agencies include the Agency for Healthcare Research and Quality (AHRQ), the Centers
for Disease Control and Prevention (CDC), FDA, the Health Resources and Services
Administration (HRSA), the Indian Health Service (IHS), the National Institutes of Health
(NIH), and the Substance Abuse and Mental Health Services Administration (SAMHSA).
Significant reviews that will be initiated by OIG in FY 2013 are discussed below.
Oversight of Security of the Strategic National Stockpile for Pharmaceuticals
(CDC)
OIG will begin assessing the CDC’s efforts to secure pharmaceutical stockpiles against
theft, tampering, and other loss.
Award Process for the President’s Emergency Plan for AIDS Relief Cooperative
Agreements (CDC)
OIG will begin reviewing the CDC’s process for awarding cooperative agreements under
the President’s Emergency Plan for AIDS Relief program to ensure compliance with
applicable laws, regulations, and departmental guidance.
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Oversight of HIV/AIDS Prevention and Research Grants (CDC)
OIG will begin evaluating whether the CDC conducted its oversight of HIV/AIDS
prevention and research grants in accordance with federal regulations and HHS
policies.
Grantee’s Use of Funds (CDC)
OIG will begin examining whether CDC grantees receiving FY 2012 HHS appropriations
used the funds for the allowable purposes of healthy lifestyle promotion and chronic
disease reduction.
Oversight of Wholesale Prescription Drug Distributors (FDA)
OIG will begin determining the adequacy of FDA’s oversight of wholesale prescription
drug distributors and the effectiveness of the FDA’s processes for ensuring that states
are licensing wholesalers according to applicable state and federal laws.
Contract Health Services Program’s Compliance with Appropriations Laws (IHS)
OIG will begin evaluating whether IHS adequately oversees the appropriate funding of
its Contract Health Services program, as well as whether the program is in compliance
with the requirements specified in appropriations statutes.
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Equipment Purchases and Extramural Construction Grants (NIH)
OIG will begin determining whether NIH grantees’ claims for equipment purchases at
selected schools comply with the Recovery Act and applicable federal requirements and
determining whether NIH grantees that received extramural constructions grants
complied with appropriate bidding procedures, and with grant, Recovery Act, and
applicable federal requirements on allowable expenditures.
Human Subjects Protection Practices of National Cancer Institute Extramural
Grantees Collecting Biospecimens (NIH)
OIG will begin assessing the extent to which informed consent documents for research
that includes the collection of biospecimens comply with regulations protecting human
subjects, the extent to which Institutional Review Boards (IRBs) overseeing such
research comply with applicable regulations, and the extent to which IRBs and principal
investigators address the unique risks associated with such research.
Select Agent Shipments to and From Foreign Countries
OIG will begin reviewing exports and imports of select agents (biological agents and
toxins that have the potential to pose a several threat to human, animal, or plant health
or to animal or plant products) between U.S. based-entities and foreign countries, which
exports and imports occurred during the time period October 1, 2009 through
September 30, 2011.
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Protections of Human Research Subjects (OHPR)
OIG will begin reviewing the Office for Human Research Protections’ oversight of
institutional compliance with federal requirements protecting the rights, welfare, and
well-being of human subjects involved in HHS conducted or supported research.
Oversight of Laboratory-Developed Tests (HHS)
OIG will begin examining the HHS agencies’ oversight of clinical effectiveness of
laboratory developed tests (LTD), a category of in vitro diagnostics which have typically
been used in research settings only, and determine the how LDTs are being used in
making healthcare decisions and identify regulatory challenges.
OIG also engages in the following Public Health Legal Activities and Investigations:
Public Health Legal Activities (DOJ)
OIG will continue to assist DOJ in resolving civil and administrative fraud cases, in
promoting compliance of HHS grantees, and in developing and pursuing federal false
claims against institutions receiving grants from NIH and other public health service
agencies.
Public Health Investigations—Violations of Select Agent Requirements (CDC, FBI,
and the U.S. Department of Agriculture)
OIG will continue to work with the CDC, FBI, and the U.S. Department of Agriculture to
investigate and impose civil monetary penalties for violations of federal requirements for
the registration, storage, and transfer of select biological agents and toxins by academic
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institutions, commercial manufacturing facilities, and federal, state, and local
laboratories.
Significant ongoing reviews at other agencies include the following:
Early Implementation of Patient Safety Organizations (AHRQ)
OIG will assess the role of patient safety organizations (PSOs) in patient safety
reporting, focusing on the extent of participation among hospitals, and PSO practices
related to analyzing adverse events and generating reports for providers and the
Network of Patient Safety Databases Maintained by AHRQ.
Health Center Adoption of Routine Testing for Human Immunodeficiency Virus
Testing (HRSA)
OIG will determine the extent to which the CDC’s recommendations for routine HIV
testing have been adopted by HRSA-funded health centers, which are critical sources of
access for populations disproportionately affected by HIV.
Community Health Centers’ Compliance with Grant Requirements of the
Affordable Care Act (HRSA)
OIG will evaluate whether community health centers that received funds under the ACA
are complying with applicable federal laws and regulations.
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SAMHSA
OIG will review SAMHSA’s progress in identifying performance goals for the Substance
Abuse Treatment Block Grant program designed to promote effective substance abuse
treatment and recovery and will determine if and to what extent to which states are
reporting and meeting goals.
Additionally, OIG will review grantees’ use of Prevention and Public Health Fund
awards, made pursuant to ACA Section 4002, to determine whether the use of the
funds was in accordance with the purposes stated in the federal award letters and
complied with the program requirements and the ACA regulations.
Part VII: Other HHS-Related Reviews
OIG annually undertakes a number of reviews addressing department-wide issues,
such as financial statement audits; financial accounting; information systems
management; and other departmental issues. OIG plans to continue these activities in
FY 2013.
Some planned reviews of particular concern to healthcare providers are as follows:
Fraud Vulnerabilities Presented by Electronic Health Records
In FY 2012, OIG stated that it planned to “investigate fraud and abuse vulnerabilities in
electronic health records (EHR) systems and seek to determine how certified EHR
systems address these vulnerabilities.” In the FY 2013 Work Plan, OIG states that it will
continue focusing on this issue and lists it as a “work in progress.” This restated focus
comes on the heels of a September 24, 2012 “warning” letter to several hospital
associations from the U.S. Attorney General and HHS. The September 24, 2012 letter
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warned providers against “cutting and pasting” or “cloning” records from different dates
of service or different patients in order to facilitate “upcoding.”
HHS Programs’ Vulnerabilities to Grant Fraud
OIG has identified the review of vulnerability of HHS programs to grant fraud as a new
issue for FY 2013. Specifically, OIG plans to review HHS programs that are vulnerable
to grant fraud. OIG also plans to assess how HHS-awarding agencies mitigate the
potential risks for fraud, abuse, and mismanagement of grant funds. OIG also intends to
look at whether grantees who have exhibited fraudulent or abusive behavior in the past
are able to receive funds from other programs or whether the awarding programs have
mechanisms in place for identifying past fraudulent behavior by grantees. This focus
area will be of particular concern to healthcare providers and organizations receiving
grant money, such as innovation health awards, from CMS as a result of the ACA as
they may be subjected to heightened scrutiny.
Use of Grant Funds for Lobbying Activities
Also with regard to grant funds, OIG plans to examine whether HHS grantees are being
informed of the prohibition of using grant money for lobbying activities. Further, OIG
plans to assess whether the HHS agencies have mechanisms in place for identifying
and addressing violations of this lobbying prohibition.
State Protections for People in Residential Settings Who Have Disabilities
OIG previously recommended that CMS, the Administration for Children and Families,
SAMHSA, and FDA work cooperatively to provide information and technical assistance
to the states for strengthening state protections for people with disabilities living in
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residential settings. CMS now plans to review the actions taken by these agencies and
operating divisions.
*Laura Schattschneider's portion of this article was written prior to her federal service, and the views expressed therein do not necessarily represent the views of the U.S. Department of Health & Human Services or of the United States.
2013 OIG Work Plan Summary © 2012 is published by the American Health Lawyers Association. All rights reserved. No part of this publication may be reproduced in any form except by prior written permission from the publisher. Printed in the United States of America.
Any views or advice offered in this publication are those of its authors and should not be construed as the position of the American Health Lawyers Association. “This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought”—from a declaration of the American Bar Association